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Checking In: Donít Forget This Precious Metals Play


Everyone and his sister is enamored by precious metals, particularly gold and silver. Thatís proved to be quite a boon for ETFs that are backed by physical holdings of those metals and one need look no further than the fact that the SPDR Gold Shares (NYSE: GLD) has become the worldís largest ETF by assets.

Of course, there is more to the precious metals theme than just gold and the ETFs that hold the yellow metal. Investors with an appetite for risk may do well to diversify their precious metal holdings with some of goldís friends, such as silver, platinum and palladium.

The ETFS Physical White Metals Basket Shares (NYSE: WITE) represents one-stop shopping for accomplishing that objective. Simply put, WITE is precious metals without the gold. The ETF, which made its debut in December, is weighted exclusively to silver, platinum and palladium.

That makes WITE, which has attracted over $70 million in assets under management, a compelling bet on two fronts. First, goldís rising tide is showing that can lift the sails of other precious metals. Investors seeking out cheaper alternatives to gold are embracing silver and to a lesser extent, palladium.

Second, and weíll admit this may be hard to fathom in this environment, but should the global economy avoid a double-dip recession and rebound, WITEís exposure to precious metals with abundant industrial uses will serve the ETF well.

WITEís breakdown is as follows: Nearly 50,000 ounces of silver, almost 500 ounces of platinum and almost 400 ounces of platinum. Silver can and should be viewed as the primary driver of WITEís price action and at the end of the day, WITE can be viewed as silver ETF with a platinum and palladium kicker.

Thatís a noteworthy concept for the investor looking for a little something more beyond gold and silver. While WITE has been outperformed by the ETFS Physical Silver Shares (NYSE: SIVR), ETF Securitesí rival to the iShares Silver Trust (NYSE: SLV), in the past three months, the silver component has allowed WITE to sharply outperform the ETFS Physical Palladium Shares (NYSE: PALL) and the ETFS Physical Platinum Shares (NYSE: PPLT) over the same time frame.

Bottom line: If WITE retreats to support just below $65 and that support holds, that would be a valid entry point because if spot silver makes a move to $50 and beyond, WITE probably heads to the high 70s.


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